This is a significant breakthrough, which I have encouraged them to do for some time.
Here is the BEA’s official release (March 25, 2016), which re-defined GDP as follows:
“Real gross domestic product — the value of the goods and services produced by the nation’s economy [GO] less the value of the goods and services used up in production [II], adjusted for price changes — increased at an annual rate of 1.4 percent in the fourth quarter of 2015, according to the “third” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.0 percent.”
Thus, the BEA defines GDP as follows:
GDP = GO – II,
where
GDP = gross domestic product (value of final goods and services)
GO = gross output (total revenues/sales at all stages of production)
II = intermediate inputs (value of supply chain)
I am not sure why the BEA won’t simplify the definition of GDP to define it simply as “the value of final goods and services.” But in any case, it’s a good way to introduce GO.
Mark Skousen
Hi Mark, your interview with Larry Kudlow was impressive. Well done.
I looked for Gross Output stats at BEA and quickly became completely baffled. Where on BEA would be the best place to track this useful data stream?
Thanks in advance,
-Bill
Bill,
The Gross Output data is listed under “GDP-by_industry” on the BEA website. To get to the GO data tables, click on the “Interactive Data” tab, then click “GDP-by-industry”, click “Begin using the data…” and finally click “GROSS OUTPUT BY INDUSTRY” to expand the list of data tables containing annual and quarterly data for GO.